Harvest Grp. v. Love's Travel Stops & Country Stores, Inc.

90 F.4th 1271

HARVEST GROUP, LLC, Plaintiff Counter-Defendant - Appellant, v. LOVE'S TRAVEL STOPS & COUNTRY STORES, INC.;Musket Corporation, Defendant Counterclaimants - Appellees.

No. 22-6170

United States Court of Appeals, Tenth Circuit

FILED January 17, 2024

Appeal from the United States District Court for the Western District of Oklahoma (D.C. No. 5:20-CV-00435-C)

Gerard Michael D'Emilio, GableGotwals, Oklahoma City, Oklahoma (Rob F. Robertson, and Ashlyn M. Smith, GableGotwals, Oklahoma City, Oklahoma; and Amelia A. Fogleman, GableGotwals, Tulsa, Oklahoma, with him on the briefs), for Plaintiff Counter-Defendant - Appellant.

Peter S. Wahby, Greenberg Traurig, LLP, Dallas, Texas (Jesse W. Wainwright, Greenberg Traurig, LLP, Austin, Texas; and Allison M. Stewart, Greenberg Traurig, LLP, Dallas, Texas, with him on the briefs), for Defendant Counterclaimants - Appellees.

Before HARTZ, TYMKOVICH, and PHILLIPS, Circuit Judges.

HARTZ, Circuit Judge.

Harvest Group, LLC (Harvest) appeals from the summary judgment granted by the United States District Court for the Western District of Oklahoma in favor of defendants Love's Travel Stops & Country Stores, Inc. and Musket Corp. (collectively, Love's)¹ on Harvest's breach-of-contract claim. Harvest helps other businesses acquire "economic development incentives" offered by federal, state, and local governments as inducements to attract business. Aplt. App., Vol. 3 at 425. Love's entered into a contract with Harvest (the Agreement) for its help in procuring incentives related to the development of a renewable diesel facility (the Project) to be constructed in the City of Hastings in Adams County, Nebraska. In exchange, Harvest would earn a fee of 10% of the "net present value" of any "incentives/benefits" for the Project that it helped Love's acquire and Love's chose to utilize. Id. at 426.

The parties' dispute on appeal arises primarily from a favorable property-tax assessment (the Assessment) for the Project which greatly reduced its estimated tax burden below internal estimates originally produced by Love's. The Assessment was issued by the Adams County tax assessor after members of Harvest, with approval from Love's, met with city and county officials, including the assessor. Harvest alleges the Assessment was an incentive/benefit within the meaning of the Agreement, and thus one for which it is owed a fee. Love's argues in response (1) that the Assessment was not an "incentive" within the meaning of the Agreement; and (2) that in any event it was not the product of Harvest's efforts but simply the result of the assessor's straight-forward application of Nebraska tax law. The parties also dispute whether Harvest is owed interest and whether Harvest was the "prevailing party" below and thus was owed attorney fees.

We have jurisdiction under 28 U.S.C. § 1291 over the appeal of this diversity action originally brought under 28 U.S.C. § 1332. Because we reject Love's argument that the Assessment was not an "incentive/benefit" under the Agreement and agree with Harvest that there are genuine disputes of material fact about whether the Assessment was the product of Harvest's efforts, we reverse the district court's grant of summary judgment to Love's on those issues. Those same factual disputes require us to affirm the district court's denial of Harvest's motion for summary judgment. We also reverse the district court on the issues of Harvest's entitlement to interest and whether Harvest was the prevailing party below. We remand for further proceedings.

I. BACKGROUND

A. Factual Background

Most of the relevant facts are undisputed. Where different inferences can be drawn from the evidence, we review matters in the light most favorable to the party opposing summary judgment. See Huff v. Reeves, 996 F.3d 1082, 1085 (10th Cir. 2021) ("At the summary judgment stage, the court may not weigh evidence and must resolve genuine disputes of material fact in favor of the nonmoving party." (ellipsis and internal quotation marks omitted)).

Harvest, operated by its founders Norman Wesley Bowen and Rudy Watkins, helps businesses obtain "economic development incentives." Aplt. App., Vol. 3 at 425. In September 2018 Harvest entered into the Agreement with Love's, under which it would help Love's obtain incentives for developing a tire retread facility in Tennessee (unrelated to this dispute) in exchange for 10% of the value of the "incentives/benefits" Love's chose to pursue. Id. at 426. The following month, the parties added a new potential project to the Agreement, whereby Harvest would help Love's obtain economic development incentives related to the Project in Nebraska in exchange for the same 10% fee. Neither party disputes the validity of the Agreement.²

From October 2018 to August 2019, Harvest met with numerous state and local officials on behalf of Love's, obtaining millions of dollars' worth of economic-development incentives for the Project. In August 2019 Love's received from its contractor an estimated construction cost for the facility of $298,500,073. Love's tax department determined that 94% of the building components would be classified as real property and 6% as personal property. Any personal property at the Project would be exempt for 10 years from property taxes under a separate "Nebraska Advantage" incentive obtained by Harvest. Love's internal tax analysis estimated that property taxes for the Project would amount to $5 million a year. These tax calculations were provided to Harvest. Kris Rogers, the tax director at Love's, and Spencer Haines, Love's Chief Financial Officer, both communicated to Harvest that they felt the estimated property-tax burden was "too high" for the project to be attractive. Id., Vol. 4 at 635.

Harvest formulated a "novel and unique" strategy to deal with this property-tax burden. Id. at 634 (Bowen declaration). It proposed to "resolve the high tax estimate by meeting with the assessor before the project was announced while the community was still vying for the project." Id. This approach was novel because "most large corporations"—including Love's—"simply build their facilities, report the assets to the Assessor as they have internally classified them, and then challenge the value and segregation of assets with the assessor at a later date often with the help of a firm specializing in property tax negotiations." Id. Harvest's strategy included (1) reducing the overall value of the Project by "excluding certain costs for property tax purposes" and (2) segregating assets with the tax assessor in a "pre-construction conference" to reduce the percentage of assets classified as real property by classifying them as personal property. Id.

On September 18, 2019, Bowen had a telephone call with the mayor of Hastings. Bowen told the mayor that Harvest "was aware" that the county tax assessor, Ms. Jackie Russell, had discretion in applying the tax code to the valuation and segregation of assets. Id. He asked if the mayor would call the tax assessor to see if she would be willing to meet with Harvest "to determine if we could devalue the project and segregate assets deemed as real property by Love's to personal property in order to create an environment with a more palatable estimated property tax liability for our client." Id. Bowen said in reference to this conversation with the mayor that "[a]chieving a lower property tax estimate represented an important inducement opportunity for the County in order for Love's to make the investment" in the Project. Id. at 634-35.

Late that afternoon, assessor Russell sent Bowen an email responding to his questions about Nebraska real- and personal-property tax law, saying that she was "finding it really hard to process the fact that you would not have a lot of personal property value in this project." Id., Vol. 5 at 911.

The next day, Bowen and Watkins had a conference call with executives from Love's, including Haines and Samuel Crites, General Manager of Business Development at Musket. Haines brought up the property-tax issue and said that "he felt there was an opportunity to reduce the property taxes by Harvest negotiating a reduced value with the Adams County Tax Assessor." Id., Vol. 4 at 666 (Crites declaration). After Harvest explained its tax strategy, Haines "said that [Love's] would normally pay whatever is assessed for ten years and then challenge the classification, but Harvest's approach [was] better." Id. He "enthusiastically approved Harvest's plan." Id. at 635 (Bowen declaration).

During the call Bowen told Haines that Harvest "had already begun to use the leverage it had," the leverage being that "local officials wanted this facility and its economic benefits to come to Adams County and [the officials had been] told by Mr. Bowen that absent property tax relief, the facility might well never be built." Id. at 666 (Crites declaration). Bowen said that a meeting had already been set up with himself, Adams County tax assessor Russell, and other city and county officials "in an effort to get the property taxes lowered" from Love's $5 million-a-year estimate. Id. Haines "agreed that this Harvest Group plan was sound, agreed that the next day's meeting should go forward as planned, and wished Harvest Group well at the meeting." Id. After the call Crites pointed out to Haines that if Harvest was successful at the meeting with the tax assessor, its fees would be increased. Haines responded that "the benefits gained would be worth the fees paid for this gain; that he did not mind paying for added value for the company." Id.

A meeting on September 20 was attended by Harvest members Bowen and Watkins, assessor Russell, the mayor, the city attorney, and the Hastings economic development director; no one from Love's was present. Bowen provided the following account: The attendees "discussed the importance of the project to the local community and the issue of Love's perception that the property tax estimates...